Health care reimbursements for MSU employees reduced pending lawsuit

Jan. 20, 2014

Written by

Lindsay VanHulle

Gannett Michigan

EAST LANSING — Michigan State University will pay out the bulk of $7 million in negotiated health care reimbursements to thousands of union workers starting next week, although those payments will be smaller than first expected.

The payments — more than $1,000 each — will show up Jan. 24 in paychecks for employees paid every other week, and Jan. 31 for those paid monthly, MSU spokesman Jason Cody said. They include roughly 5,800 mid-level managers, police officers, cafeteria workers and others represented by eight separate campus unions.

But they will be smaller than the $1,200 originally promised because of a lawsuit filed by a retiree last month that could become a class-action case.

Wayne Cass, the former chairman of the Coalition of Labor Organizations at MSU who in 2010 helped negotiate the reimbursements, alleges breach of contract and an unjust benefit to MSU in a six-count lawsuit filed in December with the Michigan Court of Claims.

“MSU is going to vigorously defend against this lawsuit,” Cody said. “This is the pact that everyone agreed to, and MSU feels like it’s fair.”

Under a contract that ended in 2013, employees in the eight unions agreed to a 10 percent cut in university-paid health care benefits and to pay the difference if costs rose more than 5 percent in a year. In return, the university agreed to share any savings if cost increases were contained under 5 percent.

At the time, contract language forbid cash payments, but that changed under a new contract that started Jan. 1. Now, only employees working as of this year qualify for the one-time rebates.

Cass disagrees. He claims in his lawsuit that those health care savings were accruing on behalf of now-retired employees, too, who are shut out of the deal.

MSU calculated an equal payment that includes both active and retired employees — should the court require it to pay retirees — that lowered the amount from $1,200 to $1,000, Cody said. If the court rules in MSU’s favor, the remaining funds will be paid to current workers.